Consider a country's balance of payments.Other things being equal,an increase in the current account deficit could result from

Question

Quizplus · Accepted Answer

An increase in the government's budget deficit means that the government is spending more than it is collecting in taxes, which leads to a decrease in the country's savings rate. This decrease in savings will result in an increase in the current account deficit because the country will need to borrow more from foreign sources to finance its expenditures.

Consider a Country's Balance of Payments